Nigeria Customs leads charge to tax sugar-sweetened drinks

The Nigeria Customs Service (NCS) is leading a campaign to re-introduce excise duty on all sugar-sweetened drinks also known as soft drinks.

Hameed Ali, comptroller-general of the NCS, said this at an interactive session on the 2022-2024 Medium-Term Expenditure Framework (MTEF) organised by the House of Representatives committee on finance, according to a report by the Cable.

Nigeria will not be alone if makes this move. Three years ago South Africa introduced Africa’s first major tax on sugar-sweetened beverages based on grams of sugar. The tax now stands at about 11 percent of the price per litre.

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However, this is not the first time the Nigerian government is proposing a collection of excise duties on soft drinks.

In 2020, Ali had asked the federal government to lift tax waivers for companies producing soft drinks within the country.

Similarly, in 2019, Zainab Ahmed, the minister of finance, had announced that the government may introduce excise duty on carbonated drinks.

Excise duty is a levy placed on the manufacture of locally produced goods.

James Faleke, chairman of the committee, had asked why NCS does not charge excise duty on non-alcoholic drinks.

Responding, the comptroller-general said the NCS had made several submissions for alcoholic and non-alcoholic drinks to be taxed.

He said both alcoholic and non-alcoholic drinks pose harmful effects to humans, adding that there is a 30 percent excise levy on alcoholic drinks.

“On several cases, I have made submissions. Mr Chairman is aware that I have been on this battle that we should re-excise the companies that were de-excised in 2019,” he said.

“What we have been fighting for is that if alcohol beverages and tobacco are injurious to our health that is why the government decided to tax them, the carbonated drinks are equally injurious to our health and they should be taxed.

“I have sung this song for many years now, Coca-Cola is producing in this country and it is not being taxed. There is nowhere you go in the world that Coca-Cola is not paying tax to its host country, but Coca-Cola in this country is not paying anything because of the government unwillingness to re-excise those companies.

“For us, we have been battling for it, and I hope that one day, we will start collecting.”

Also speaking at the event, Leke Abejide, a member of the committee, said the federal government must ensure the implementation of excise duty on all drinks, adding that it will drive revenue generation.

“Customs is doing well, and I am happy. This finance act that we passed in 2020, we should try and start making it work for carbonated drinks,” he said.

“It is already there as a law, customs should partner ministry of finance so that they will get the approval in order for them to start collecting, so that they can act and start collecting, if we implement that act, it will be very easy to collect. Even if it is not up to N2.5 trillion, at least they can cross it.”

The committee chairman said the lawmakers may consider amending the Finance Act so that excise duty will be charged on both carbonated and non-carbonated drinks.

“We will be considering, I am sure that the federal government will be coming up with the 2022 finance bill, there is a need for us to look at the possibility of charging excise duty on all drinks manufactured in this country, this on all drinks, carbonated and non-carbonated,” he said.

“Carbonated is already part of the finance act, but companies cannot be operating and making huge profits. We are talking about excise – I am sure they are paying their income tax, but in terms of production tax, even non-alcoholic are injurious, if you drink too much you will just be consuming sugar.”

The South African experience holds out lessons. A study published in The Lancet Planetary Health showed a significant reduction in the consumption of sugar-sweetened drinks in South African the health promotion levy was introduced.

In 2016, South Africa announced an intention to levy a tax on sugar-sweetened beverages (SSBs). In 2018, the country implemented an SSB tax of approximately 10 percent, known as the Health Promotion Levy (HPL).

The health promotion levy coincided with large reductions in purchases of taxable beverages, in terms of both volume and sugar quantities.